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1 ROBERT E. FREITAS (STATE BAR NO. 80948)

CRAIG R. KAUFMAN (STATE BAR NO. 159458)
2 VICKIE L. FEEMAN (STATE BAR NO. 177487)
3 ORRICK, HERRINGTON & SUTCLIFFE LLP
1000 Marsh Road
4 Menlo Park, CA 94025
Telephone: 650-614-7400
5 Facsimile: 650-614-7401
6 Attorneys for Defendants and Counterclaim Plaintiffs
7 NANYA TECHNOLOGY CORPORATION and
NANYA TECHNOLOGY CORPORATION USA.
8

9 UNITED STATES DISTRICT COURT

10
NORTHERN DISTRICT OF CALIFORNIA
11
SAN JOSE DIVISION
12

13 RAMBUS INC., Case No. CV-05-00334 RMW

14 Plaintiff, CONSOLIDATED REPLY BRIEF
IN SUPPORT OF NANYA
15 v. TECHNOLOGY CORPORATION’S
16 AND NANYA TECHNOLOGY
HYNIX SEMICONDUCTOR INC., HYNIX CORPORATION USA’S (1) MOTION
17 SEMICONDUCTOR AMERICA, INC., FOR APPLICATION OF ISSUE
HYNIX SEMICONDUCTOR PRECLUSION AND (2) MOTION
18 MANUFACTURING AMERICA INC., FOR SUMMARY JUDGMENT ON
UNCLEAN HANDS DEFENSE
19 SAMSUNG ELECTRONICS CO., LTD.,
SAMSUNG ELECTRONICS AMERICA, Date: January 30, 2009
20
INC., SAMSUNG SEMICONDUCTOR, Time: 2:00 PM
21 INC., SAMSUNG AUSTIN Location: Department 6, 4th Floor
SEMICONDUCTOR, L.P., Judge: Hon. Ronald M. Whyte
22
NANYA TECHNOLOGY CORPORATION,
23 NANYA TECHNOLOGY CORPORATION
USA,
24

25 Defendants.

26

27

28
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1 Case No. C 05-02298 RMW

RAMBUS INC.,
2
Plaintiff,
3 v.
4 SAMSUNG ELECTRONICS CO., LTD.,
et al.,
5
Defendants.
6
Case No. C 06-00244 RMW
7 RAMBUS INC.,
8 Plaintiff,
9 v.
10 MICRON TECHNOLOGY, INC., and
MICRON SEMICONDUCTOR
11 PRODUCTS, INC.,
12 Defendants.
13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28
NANYA’S CORRECTED FIRST SUPPLEMENTAL OBJECTIONS
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1 I. RAMBUS MISSTATES THE LEGAL STANDARDS GOVERNING DEFENSIVE,

NON-MUTUAL ISSUE PRECLUSION.
2
A. Nanya and Nanya USA Seek Defensive, Non-Mutual Issue Preclusion.
3
In October 2005, in State of Idaho Potato Comm’n v. G & T Terminal Packaging,
4
Inc., 425 F.3d 708 (9th Cir. 2005), the Ninth Circuit explained the difference between offensive
5
and defensive issue preclusion.
6

7 “Offensive” use of nonmutual collateral estoppel occurs when a

plaintiff seeks to prevent a defendant from relitigating an issue that
8 the defendant previously litigated unsuccessfully against a different
party. “Defensive” use of nonmutual collateral estoppel involves a
9 defendant attempting to preclude a plaintiff from relitigating an
issue that the plaintiff previously litigated unsuccessfully against a
10 different party.
Id. at 714 n.3 (citations omitted). In arguing that this case involves offensive issue preclusion,
11
Rambus cites this Court’s decision from April 2005 in the Hynix case. In that case, the Court
12
stated:
13

14 Hynix contends that Rambus’s characterization of the application of

collateral estoppel here as defensive is incorrect. However, Hynix
15 is mistaken: defensive use of collateral estoppel requires the
plaintiff to be party to both actions, while offensive collateral
16 estoppel applies when the defendant be party to both actions. Here,
Hynix is asserting collateral estoppel, making Hynix the plaintiff
17 with respect to the spoliation issue. As Rambus was party to both
actions and is defending claims of spoliation, the application of
18 collateral estoppel here is offensive rather than defensive.

19 Hynix Semiconductor, Inc., et al. v. Rambus, Inc., Case No. CV-00-20905 RMW (N.D. Cal. Apr.

20 25, 2005), Docket No. 1009 at 7 n.1. The Ninth Circuit’s subsequent Potato opinion is

21 controlling, and it makes clear that the assertion of issue preclusion by the Nanya parties in

22 support of their unclean hands defenses is defensive.

23 Rambus attempts to obscure the issue by discussing which party is the “plaintiff”

24 and the “defendant” in one case or the other. Rambus confuses the question of which party is on

25 which side of the “v.” with the real issue. As Nanya and Nanya USA explained in their moving

26 papers, the plaintiff/defendant inquiry turns on whether the party asserting preclusion is doing so

27 in support of an affirmative claim for relief, or not. Thus, in the cases cited by the Nanya parties,

28 but ignored by Rambus, the assertion of issue preclusion by defendants in declaratory judgment
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1 actions was held to be offensive. See Burlington N. Ry. Co. v. Hyundai Merchant Marine Co.,
2 Ltd., 63 F.3d 1227, 1232 (3d Cir. 1995); General Cas. Ins. Co. v. Penn-Co Constr., Inc., 2005
3 U.S. Dist. LEXIS 3267 at *104 (N.D. Iowa March 2, 2005).
4 Here, Rambus is the “plaintiff,” both in the sense that it is on the left side of the
5 “v.” and the relevant sense that it is a patent infringement claimant. Nanya and Nanya USA seek
6 to defeat Rambus’s affirmative infringement claims by establishing the defense of unclean hands.
7 In support of their defenses, they invoke defensive, non-mutual issue preclusion.
8 B. Rambus Improperly Relies On “Inconsistency” And Discretionary Concerns.
9 1. Discretion Is Available Only In The Case Of Offensive, Non-Mutual
Issue Preclusion.
10
Rambus argues that courts have discretion to determine whether to apply
11
defensive, non-mutual issue preclusion, and that inconsistency is a relevant “fairness” issue to be
12
considered in the exercise of discretion. Here also, Rambus misstates the governing legal
13
standards.
14
Parklane Hosiery establishes that a district court has discretion in the
15
determination of whether offensive, non-mutual issue preclusion should be applied. Parklane
16
Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979). That holding would not have been necessary if
17
there were a similar exercise of discretion available in other cases. As the Supreme Court pointed
18
out in Parklane Hosiery, there are several reasons why offensive and defensive issue preclusion
19
“should be treated differently.” Id. at 329.
20
In cases like this, involving defensive, non-mutual issue preclusion, the
21
discretionary power recognized in Parklane Hosiery for offensive, non-mutual issue preclusion is
22
not available. The “different treatment” of offensive and defensive preclusion results in a
23
different standard of review on appeal, given the absence of a need for deferential review of a
24
district court’s exercise of discretion when defensive preclusion is involved. Jean Alexander
25
Cosmetics, Inc. v. L’Oreal USA, Inc., 458 F.3d 244, 248-49 (3d Cir. 2006).
26
Rambus erroneously claims that the following passage in Blonder-Tongue Labs.,
27
Inc. v. University of Ill. Found., 402 U.S. 313 (1971), stands for the proposition that courts have
28
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1 discretion with respect to defensive, non-mutual issue preclusion: “[N]o one set of facts, no one
2 collection of words or phrases, will provide an automatic formula for proper rulings on estoppel
3 pleas. In the end, the decision will necessarily rest of the trial courts’ sense of justice and equity.”
4 Id. at 333-34. Rambus misconstrues Blonder Tongue. The full paragraph in which the above
5 quote appears is as follows:
6 Determining whether a patentee has had a full and fair
chance to litigate the validity of his patent in an earlier case is of
7 necessity not a simple matter. In addition to the considerations of
choice of forum and incentive to litigate mentioned above, certain
8 other factors immediately emerge. For example, if the issue is
nonobviousness, appropriate inquiries would be whether the first
9 validity determination purported to employ the standards
announced in Graham v. John Deere Co., supra; whether the
10 opinions filed by the District Court and the reviewing court, if any,
indicate that the prior case was one of those relatively rare instances
11 where the courts wholly failed to grasp the technical subject matter
and issues in suit; and whether without fault of his own the patentee
12 was deprived of crucial evidence or witness in the first litigation.
But as so often is the case, no one set of facts, no one collection of
13 words or phrases, will provide an automatic formula for proper
rulings on estoppel pleas. In the end, decision will necessarily
14 rest on the trial courts’ sense of justice and equity.
15 Id. at 333-34 (emphasis added) (footnotes omitted). The sentence quoted by Rambus, like the rest
16 of the paragraph in which it appears, concerns whether the patentee had a full and fair chance to
17 litigate, nothing more. A “sense of justice and equity,” rather than a formula, is what determines
18 whether this occurred. Blonder-Tongue does not stand for the proposition that courts have
19 discretion not to apply defensive, non-mutual issue preclusion when the party against whom
20 preclusion is asserted had a full and fair opportunity to litigate.
21 Rambus cites no Ninth Circuit authority holding that courts have discretion not to
22 apply issue preclusion when the basic elements of issue preclusion are satisfied. Rambus instead
23 cites Parklane Hosiery, which is inapposite because it involved offensive preclusion. See
24 Rambus Opp. at 23-24. Rambus argues that the Supreme Court’s statement that “[t]he problem of
25 unfairness is especially acute in cases of offensive estoppel,” id. at 331 n.15, means that “the
26 problem of unfairness” can arise in defensive situations. Parklane Hosiery does not change
27 Blonder Tongue’s holding that the “fairness” concerns in a defensive situation relate to whether
28 the plaintiff had a full and fair opportunity to litigate.
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1 2. Rambus’s Cases Do Not Reflect A Discretionary Denial Of Defensive,

Non-Mutual Issue Preclusion.
2

3 Rambus also cites a Federal Circuit decision, two unpublished out-of-state district
4 court cases, and a bankruptcy decision from Delaware. None of these cases supports Rambus’s
5 contention that the application of defensive, non-mutual issue preclusion is discretionary.
6 In Stevenson v. Sears, Roebuck & Co., 713 F.2d 705 (Fed. Cir. 1983), the Federal
7 Circuit applied defensive, non-mutual issue preclusion despite the existence of prior inconsistent
8 decisions on validity because the plaintiff had a full and fair opportunity to litigate. “The proper
9 inquiry for the court is whether the patentee had a full and fair opportunity to litigate the validity
10 of his patent in the prior unsuccessful suit. We hold that this is the proper inquiry even if there
11 are two seemingly inconsistent prior determinations on ‘validity.’” Id. at 713. In other words,
12 Stevenson applied the elements of issue preclusion and once it was determined that the patentee
13 had a full and fair opportunity to litigate the identical issue in the prior proceeding, barred the
14 plaintiff from relitigating validity. There was no discretionary or “fairness” inquiry because
15 Stevenson was a case of defensive, non-mutual issue preclusion.
16 The other cases Rambus cites are similarly unhelpful to Rambus. In In re
17 Ameriserve Food Distrib., Inc., 267 B.R. 668 (D. Del. 2001), the defendant filed a summary
18 judgment motion arguing that a prior bankruptcy court finding against the plaintiff estopped it
19 from pursuing the present action. The court declined to apply issue preclusion because there was
20 doubt about whether the plaintiff had a “fair opportunity procedurally, substantively and
21 evidentially to pursue his claim the first time.” Id. at 672 (citing Blonder-Tongue). The reason
22 the court did not apply issue preclusion was because there was not a full and fair chance to
23 litigate, not because of an exercise of discretion based on other concerns.
24 In Brewer v. Dupree, 2003 WL 23507795 at *4-5 (M.D. Ala. 2003) , the defendant
25 sought preclusive effect for rulings in a prior employment discrimination case in which the
26 plaintiff had litigated and lost against a different defendant. The court observed that “[t]he most
27 significant safeguard in applying estoppel is ‘the requirement of determining whether the party
28 against whom an estoppel is asserted had a full and fair opportunity to litigate.’” Id. (citation
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1 omitted). The court found that with respect to all but one issue, preclusion should be applied
2 because the plaintiff had a full and fair opportunity to litigate. The court cited Blonder-Tongue
3 for the proposition that “The authorities have been more willing to permit a defendant in the
4 second suit to invoke estoppel against a plaintiff who lost on the same claim in an earlier suit,”
5 which is exactly the case we have here. Id. As in In re Ameriserve, the court’s inquiry was
6 directed to the question of whether there had been a full and fair opportunity to litigate in the
7 prior case.
8 Finally, in Southwestern Bell Telephone, L.P. v. Arthur Collins, Inc., 2005 WL
9 6225305 at *3-*4 (N.D. Tex. 2005), the plaintiff filed a declaratory judgment action seeking a
10 finding of non-infringement or invalidity. The plaintiff argued that the court should give
11 preclusive effect to a prior claim construction order in a different case in which the declaratory
12 judgment defendant was the patentee/plaintiff. The issue was whether issue preclusion applies
13 when an appellate court affirms a prior ruling on one ground and does not address other grounds.
14 Id. at *3. This question has no bearing on the present case.
15 II. NANYA AND NANYA USA ARE ENTITLED TO ISSUE PRECLUSION ON
EACH OF THE 27 IDENTICAL ISSUES DECIDED IN THE MICRON
16 DELAWARE ACTION.
17 A. Identity of Issues.
18 Rambus argues that Issues 12, 14, 16, and 24-27 “[l]ike the general propositions
19 for which they stand, . . . suffer from . . . a lack of identicality [sic] with the issues in this case
20 . . . .” Opp. at 30.1 Rambus is incorrect.
21 First, Issues 12, 14, 16, and 24-27 are literally identical to issues that were decided
22 in the Micron Delaware action. Nanya and Nanya USA presented the issues for which they seek
23 preclusion in the identical language in which they appear in Judge Robinson’s order to underscore
24 the fact that the issues are identical. Whether and how the issues are significant presents
25 additional questions addressed below, but there can be no doubt for issue preclusion purposes as
26
1 Rambus does not dispute that Issues 1-11, 13, 15, and 17-23 are identical to issues decided in
27 the Micron Delaware action. Nor does Rambus dispute that the “actual litigation” and “finality”
requirements are satisfied for all issues.
28
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1 to whether the issues are identical. Rambus appears to be trying to say something else when it
2 claims that literally identical issues are “not identical.” See Part IV infra.
3 Rambus contends that the issues are not identical because accused products in the
4 Micron Delaware action and this action are not identical. Opp. at 15. That different products are
5 involved does not alter the fact that the issues for which preclusion is sought are identical to
6 issues resolved by Judge Robinson against Rambus. For example, Issue 25 is that “Rambus
7 destroyed ‘documents relating to, inter alia, contract and licensing negotiations, patent
8 prosecution, JEDEC and Board meetings, and finances.’” This issue makes no reference to
9 products. Regardless of whether or not the same products were at issue in the Micron Delaware
10 action as this action, Nanya and Nanya USA intend to prove that “Rambus destroyed ‘documents
11 relating to, inter alia, contract and licensing negotiations, patent prosecution, JEDEC and Board
12 meetings, and finances.” The identity of Issue 25 with matters litigated in Delaware is complete,
13 regardless of the accused products.
14 If Rambus was suing Nanya and Nanya USA for a public nuisance, and, for
15 whatever reason, Nanya and Nanya USA sought issue preclusion on Issue 25, the issue would be
16 identical for issue preclusion purposes. Whether Issue 25 would be relevant to the nuisance case
17 would be another question, but the difference in the nature of the nuisance case and the Micron
18 Delaware case would not render identical issues not identical.
19 B. “Inconsistency.”
20 Rambus also claims that Issues 12, 14, 16, and 24-27 are “inconsisten[t] with this
21 Court’s prior decision in Hynix I.” Opp. at 30. As explained in the Nanya parties’ moving
22 papers, the existence of inconsistency is not a bar to issue preclusion and not an appropriate
23 discretionary consideration in this defensive, non-mutual issue preclusion case.2
24 C. “Necessity.”
25 Rambus makes basic legal errors in its challenge to the satisfaction of the
26 2 Rambus claims the Ninth Circuit rejected the “last in time” rule in Robi v. Five Platters, Inc.,
838 F.2d 318 (9th Cir. 1988). Robi is an offensive, non-mutual issue preclusion case in which the
27 roles of “inconsistency” and the “last in time” rule differ from their roles in this case. Id. at 327.
Moreover, the last in time rule was not followed for reasons specific to the facts of Robi. Id. at
28 328.
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1 “necessity” element. Rambus’s primary necessity argument is that “[m]ost of Nanya’s asserted
2 issues are so narrow that it cannot be said that ‘the judgment is . . . dependent upon the
3 determinations.’” Opp. at 29.
4 Rambus is wrong if it is asserting that evidentiary facts are too specific or narrow
5 to be deemed “necessary” to a court’s decision. See Restatement (Second) of Judgments § 27,
6 cmt. c (“An issue on which relitigation is foreclosed may be one of evidentiary fact, of ‘ultimate
7 fact’ (i.e., the application of law to fact), or of law.”); see also United States v. Richard, 892 F.2d
8 761, 762 (9th Cir. 1989); United States v. Hernandez, 572 F.2d 218, 221 n.3 (9th Cir. 1978);
9 Roderick v. Mazzetti & Assocs., Inc., 2005 WL 3797122 at * 9 (N.D. Cal. 2005) (applying issue
10 preclusion to evidentiary factors that were considered in prior arbitration). The evidentiary issues
11 for which Nanya and Nanya USA seek issue preclusion provide the foundation for the ultimate
12 issues Rambus appears to acknowledge as “necessary.” It is inappropriate to dismiss the
13 evidentiary issues as not necessary because they provide the foundation for the ultimate issues.
14 See United States v. Castillo-Basa, 483 F. 3d 890, 900 n.7 (9th Cir. 2007) (“We have often held
15 that an issue was ‘necessarily decided’ at a trial even when the issue was not an element of the
16 offense in question.”); United States v. Sarno, 596 F.2d 404, 408 (9th Cir. 1979) (holding that the
17 veracity of the defendant's testimony had been necessarily decided in a trial for bribery, of which
18 veracity is not an element: “As evidence to resolve the latter issue, one of the respective versions
19 of the steam room conversation had to be relied upon. Thus, the veracity of Sarno’s testimony on
20 that point was a factor raised in the first case and sufficiently similar and material to the perjury
21 action to justify invoking the collateral doctrine issue.”).
22 Rambus’s specific argument that pre-December 1998 findings were dicta ignores
23 that these issues are part of the foundation for Judge Robinson’s conclusions and are probative of
24 Rambus’s intent. In any event, Rambus’s attack on the evidentiary findings is unavailing. As
25 long as the findings on the ultimate issues stand, the application of issue preclusion is sufficient to
26 establish all of the elements of the Nanya parties’ unclean hands defenses.
27

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1 III. THERE IS NO REQUIREMENT THAT LITIGATION BE FORESEEABLE “AS

TO NANYA.”
2

3 Rambus argues that issue preclusion is not appropriate because there was no

4 finding by Judge Robinson that litigation was reasonably foreseeable “as to Nanya.” Opp. at 18-

5 19. Rambus claims that the absence of such a finding means that “the issue of spoliation” is not

6 identical. Id. at 14. This argument reflects a misunderstanding of the Nanya parties’ motion and

7 the law of issue preclusion, but the more important point is that the unclean hands defenses

8 asserted by Nanya and Nanya USA do not require a determination that litigation was foreseeable

9 as to either of them.

10 The “foreseeable as to Nanya” argument, which is not accompanied by a citation

11 to any supporting authority, is a recycling of a similar argument made and rejected in the Infineon

12 case. Rambus, Inc. v. Infineon Techs. AG, 222 F.R.D. 280, 295 n.31 (E.D. Va. 2004) (“Rambus

13 submits, without decisional support, that, before a court can find spoliation, it must find that the

14 alleged spoliator reasonably anticipated litigation with the specific party who later alleges the

15 spoliation. Although the spoliation decisions tend to arise in the context of anticipated litigation

16 with a potentially identified adversary, there is no decision that articulates the rule as Rambus

17 presents it. Moreover, Rambus’ argument is somewhat disingenuous given that, in 1998, 1999,

18 and 2000, Rambus had identified a number of DRAM manufacturers, including Infineon, as the

19 targets of Rambus’ litigation. Hence, even if the rule were as Rambus contends, Rambus would

20 fall within it.”) The “foreseeable as to Nanya” argument is not a correct statement of the law of

21 spoliation of evidence, and it does not accurately describe any element the Nanya parties must

22 establish to prove unclean hands.

23 Nanya and Nanya USA contend that the “bad faith” element of their unclean hands

24 defenses is established by Rambus’s spoliation of evidence. As this Court has noted, spoliation of

25 evidence is sufficient to satisfy this element. Hynix Semiconductor Inc. v. Rambus, Inc., 2006

26 WL 565893, 20 (N.D. Cal. Jan. 5, 2006). “Spoliation of evidence is ‘the destruction or significant

27 alteration of evidence, or the failure to properly preserve property for another’s use as evidence in

28 pending or reasonably foreseeable litigation.’” Id. The “destruction or significant alteration of

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1 evidence” or the “failure to properly preserve property for another’s use as evidence” when
2 litigation is “pending or reasonably foreseeable” is spoliation regardless of who is complaining.
3 Judge Robinson’s findings establish that Rambus engaged in spoliation of evidence. There is no
4 need for consideration of whether litigation was foreseeable as to Nanya or Nanya USA when
5 Rambus did so.
6 On the assumption that Nanya-specific foreseeability is required, Rambus’s
7 arguments are not sufficient to raise an issue of fact. Rambus notes that Judge Robinson did not
8 make a Nanya-specific foreseeability finding, and it argues that certain items of evidence do not
9 establish that litigation against Nanya was foreseeable. Other evidence shows that Nanya was a
10 specific target of infringement litigation before, for example, the “nuclear winter” memorandum,
11 and Rambus’s failure to explain undisputed evidence leaves it without a basis to avoid summary
12 determination of any requirement that litigation “as to Nanya” be foreseeable. See Nanya and
13 Nanya USA Motion for Summary Judgment at 4 (Undisputed Fact 12).
14
IV. RAMBUS’S SPOLIATION IS SUFFICIENTLY RELATED TO THIS CASE TO
15 ESTABLISH UNCLEAN HANDS.

16 To prevail on their defenses, Nanya and Nanya USA must establish that the
17 unclean hands established by Judge Robinson’s findings and the other undisputed facts is related
18 to this case. See id. at 9-10. As the Nanya parties explained in their moving papers, this element
19 is satisfied by the findings made by Judge Robinson. Both because of the nature of the evidence
20 found to have been destroyed and the connection between that evidence and the antitrust, patent
21 misuse, and other defenses asserted by Micron and the Nanya parties, a sufficient relationship is
22 clearly established. Id.
23 It may be that when Rambus claims that identical issues are not identical because,
24 for example, different products are involved, what it is really trying to say is that Nanya and
25 Nanya USA have not established the requisite relationship between the destruction of evidence
26 found by Judge Robinson and the matters in issue here. If so, for the reasons explained in the
27 Nanya parties’ moving papers, Rambus is just as wrong as it is when it claims that literally
28 identical issues are not identical. In the context of this case and the Micron Delaware case, the
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1 immaterial differences cited by Rambus do not sever the relationship between the destruction of
2 evidence found by Judge Robinson and the unclean hands defenses asserted by Nanya and Nanya
3 USA.
4 V. CONCLUSION.
5 Nanya’s and Nanya USA’s motion for application for issue preclusion, and their
6 motion for summary judgment on their unclean hands defenses, should be granted.
7 Dated: January 19, 2009 ROBERT E. FREITAS
CRAIG R. KAUFMAN
8 VICKIE L. FEEMAN
JASON S. ANGELL
9 ORRICK, HERRINGTON & SUTCLIFFE LLP
10
/s/ Robert E. Freitas /s/
11 Robert E. Freitas
Attorneys for Defendants and
12 Counterclaim Plaintiffs
Nanya Technology Corporation and
13 Nanya Technology Corporation USA
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